By Steve Moran

Increasing rates is not the answer!!

In reading Brad Stone’s book on Jeff Bezos I highlighted this quote from Bezos:

“We do not charge more because we can’t figure out how to make it cost less. We invent to make it cost less.”

I got to thinking about this challenge in the context of senior living. Imagine for a minute you had to increase revenue in your senior living organization but you could not increase rates (charge more), what would you do?

3 Ways To Increase Revenue

If you cannot charge more there are just three things you can do (though maybe you could add to this list):

1. Reduce Costs, while maintaining or improving service.

This is essentially the Amazon way. They use technology and systems to reduce costs to their customers. You may be thinking, “Yeah, but senior living is not Amazon and we can’t cut people and other expenses any more than we have.”

I am not quite so sure I buy this. We are seeing technology that holds great promise to reduce costs. Technology that helps with sales and marketing, that helps with cleaning, that replaces people. There may very well be things leaders could do to make staff more efficient.

A non-obvious way to reduce costs would be to focus on increasing length of stay. A one-month increase in a 100-person senior living community is the same as moving in 8 extra residents. This means lower churn costs.   

2. Higher Occupancy

This is obvious, higher occupancy brings in more revenue and it also means fixed costs are spread over fewer residents. What if you could just get one extra move-in per month. Huge gain.

3. New Product Lines

I am not talking about ways to charge more for care. But what if you . . . can I get a little crazy here:

    • Turned your dining services into a real restaurant.
    • Rented out your bus and driver to other organizations on the days you don’t need it.
    • Have your driver do some Uber or Lyft runs in their downtime.
    • Airbnb some of your empty units.
    • Offer your programming for a fee to older people in the local community or even nationally and internationally for your digital programing.
    • Rented your common areas to clubs and businesses for meetings.
    • Sold the side of your building for signage promoting other businesses.
    • Set up co-working spaces.
    • Worked with a learning company to have residents tutor students.
    • Set up a daycare business for team members and the public.
    • Set up a cottage industry like what Sarah Oliver Handbags did.

Not only would revenues and profits increase but the cool factor of senior living would grow like crazy and that growth would also fuel occupancy.

What are your ideas?